Shopper Culture

Safeway to Market Private Label Brand to Other Supermarkets

With the rise in demand for organically produced products, Safeway's private label O Organics brand is expected to do $400 million this year, with sales in the first quarter alone up 50% over last year. In an announcement this week, Safeway's Chairman, Steve Burd, outlined a plan for the company to begin marketing its O Organics brand to supermarkets "other than Safeway" Supermarket News

No small player, the O Organics brand is represented by more than 300 SKU's. From eggs to orange juice, cookies to pretzels and olive oil to frozen dinner entrees, the O Organics brand ranges across multiple product categories. The decision to market these items outside of Safeway to other grocery chains represents a very large endeavor and a break from the traditional role of the retailer.

So goes the recent trend of retailers moving upstream the supply chain to begin taking on the role of manufacturer, or even grower for that matter. Why and what are the implications?

Certainly retailers, like Safeway, create private label brands to increase revenue. More importantly however, these retail exclusive brands build equity that supports the retailer's unique positioning.

In the case of Safeway, the O Organics brand connects directly with Safeway's core positioning - "Ingredients for Life". It provides shoppers with a clear and tangible reason to believe and clearly differentiates the Safeway brand from other retailers. While the packaging does not carry the Safeway name, the O Organics brand is exclusively sold only in Safeway stores (for now). This exclusivity is what reinforces the Safeway brand positioning to its shopper.

So here's where things become a bit paradoxical. On the one hand, Safeway's move up the supply chain offers them a new revenue stream. It offers them a chance to convert competitors ( Kroger) to customers.

On the contrary, when shoppers find that they can buy the O Organics brand at grocery chains other than Safeway will they react? If indeed Safeway is defining itself by the exclusive brands that it carries, will the fact that these brand are no longer exclusive to Safeway erode their equity and lessen the impact of "Ingredients for Life"? Wouldn't Safeway be better served by trying to maintain "Shoppers for Life"?

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Wine pairings. Beer pairings. Soft drink pairings?

Have a look at this picture captured at a Burger King soft drink dispenser.

In an age of wine pairings, beer pairings, and even coffee pairings, do we really think this soft-drink pairing chart will persuade many customers which soft drink to pair with their 1200-calorie sandwich? Do we think the King really spent hours trying to figure out which soda fully complemented your paper-lined, vinyl tray dining experience?

Probably not, but this sticker got a reaction from me, and in a world where the consumer has been conditioned to ignore thousands of marketing messages a day, that’s a good thing.

What's more, this pairing chart brought the irrelevant tone and spirit of the advertising into the store in a natural way. A more obvious approach, to instead say Coke® is Refreshing with a Whopper®, would appear corporate and patronizing. We hand it to Burger King for small details that make a difference.

- Contributed by Tony Fuller

 

Starbucks caffeinates sales with a shot of CRM

After two quarters of declining  sales and  executive-level scrutiny on brand health following reports that the company is straying too far from their brand roots, Starbucks is introducing five new initiatives to realign the company with their true identity. Interestingly, the most attention is being placed on CRM (customer relationship management) approaches to reward their most loyal customers and better understand their needs and desires. One of these initiatives is a standard customer loyalty-rewards program at retail, and another is a new style of website for customers and employees to share thoughts with the people who run the company.

It appears Starbucks is practicing these concentrated CRM tactics to reclaim their position of being the customer's "Third Place" with home and work being number one and two. Third places are social environments generally revolving around beverages. Starbucks is fulfilling on this mission as having become a nationally accepted "Third Place" where consumers spend lots of money, time and collaboration. With their now declining sales, Starbucks recognizes that they must take consumer interaction and entertainment  to  a more subtle but effective level without being too obvious. Who wants a "Third Place" that feels uncomfortable, forced or inauthentic? But that doesn't mean you have to be home-grown and primitive in your communication or approach.

Consumers will soon be seeing something new in Starbucks retail environment with a loyalty-rewards program starting in mid-April. These "on the house" perks are for anyone who buys a Starbucks card and registers the card online, because Starbucks knows they can convert them to loyal users once they get to know them better. Participants will get free refills on coffee, a free cup of coffee when they buy a bag of whole bean coffee, hours of free Wi-Fi a day and "on the house" upgrades including syrups, soy milk, and extra whipped cream on all lattes. The in-person experience will also integrate online through monitoring and MyStarbucksIdea.com.

MyStarbucksIdea.com will initially include about a dozen categories. People can post, discuss and vote for ideas in categories such as coffee, atmosphere, food, music and social responsibility. Forty-eight Starbucks employees will respond to the posts then channel suggestions back to management. "Their job is to show up every day and engage with customers about their ideas," says CTO Chris Bruzzo.

We see two important aspects of CRM at work.

Better understanding core customers. Starbucks is embracing a highly streamlined approach in communicating to and understanding their customer with this online initiative maximizing on a CRM tool which is a smart way to "get to know" your customer, communicate directly with the customer, increase their purchases and monitor and enhance their overall brand experience (Starbucks is using Salesforce which is a top CRM/Sales tool with over 800 applications like these.)

Creating a customer-feedback protocol. Starbucks is getting great ideas directly from their customers creating a sense of involvement in the experience and overall ownership and participation by the customer. They actually show when the consumer's suggestions are "under review" or "coming soon". Each suggestion is acted on; people can view results by participating in this forum. While the suggestions are a form of user-generated content that others enjoy to read, vote on and celebrate successes when Starbucks adopts the new ideas, these comments are also indicative of Starbuck's general business model. The comments imply that Starbucks moves fast and get things done.

Other companies like Dell have joined Starbucks in implementing these innovative tools. Visit www.dellideastorm.com to see the Dell CRPM application taking hold.

We suggest more brands step outside of the comfort zone and taste-test CRM and digital technologies to understand how simple and straightforward they can be. Cost-effective technology is at your fingertips where consumers literally "tell you" what they want, and the tools allow easy customization of direct communication to niche audiences. These techniques could make a venti difference in your sales.

- Contributed by Tracy Kollker

What's in your handbag?

Cause and effect

A few of us sat through a presentation today that started with a bit of a love story. It involves Louis, a giant Pacific octopus who lives at the Newquay Blue Reef Aquarium in Cornwall, UK.  We were told that Louis had been pretty miserable, until at Christmas he was given a Mr. Potato Head to play with in his tank. He loves it.

Louis was used in this presentation in the context of shopping in order to demonstrate how a small change in our environment can lead to a dramatic change in behaviour. However, when you look into the story some more, it turns out Mr. Potato Head is not only an interesting, colorful, tactile toy to enrich his existence in a tank, but it is also a way to deliver tasty treats to Louis. There was further license taken in the story told as it's not exactly clear that he was that miserable before hand! Among the brightest of the cephalopods, Louis needs mental stimulation and Mr. Potato Head delivers.  So what has caused his excitement and interest is under question. Was it the addition of the interesting toy, or the addition of the treats? 

Either way, it was an interesting metaphor (in the context of the presentation, perhaps less so here) for us to consider in shopping environments, where we need to introduce new stimuli in order to engage people and change behaviours. This little story also highlights the difficulty of isolating effects when more than one variable is changed at the same time.  We also need to be mindful that in changing one thing, we may have another as yet unknown or undesirable affect somewhere else in close proximity - after all, we don't know how his other tank mates feel that he gets all the great toys!

- Image courtesy of bluereefaquarium.co.uk

Why the price of everything is going up

An interesting article on the impact of the rising costs of Chinese manufacturing.  This means that American shoppers will soon be paying more for a wide variety of goods and that the era of the cheap Chinese import, long a factor in the US shopping landscape is under threat. Well worth a read.

- Thanks to Morgan Bryant.

Family and friends have greatest influence over our shopping

In an article in Advertising Age today, Zenith Optimedia are about to release some data that shows:

a) Friends and family are the most influential touchpoint when it comes to influencing our shopping decisions

b) TV is still top dog for creating brand associations.

What Zenith have done is create a database of all the studies they have undertaken using the Market Contact Audit (MCA) methodology, a proprietary research and analytics methodology belonging to Integration Marketing Communications that is used by many brands around the world (many agency groups have licenses to sell and use the MCA).

Being one of those agencies and having used the MCA with a number of clients as part of our Connections Planning approach (we're fans), these aggregated findings that Zenith are going to make available don't really surprise.  The level of detail they share though will be interesting.

One mistake that I've seen clients make when using the MCA is to look only at the surface level measures - like those shared in the AdAge article. What gives the most 'clout' in this category? How is our brand performing in each channel (through the association measure)? This is to miss a great deal of the value in the methodology and is a superficial look at the findings. The MCA delivers so much rich insight into the return that channels are generating, messaging effectiveness and competitor strategies amongst other things. It is a great single source approach when you know how to read it and apply it properly.  If you have any interest into how your marketing is performing and the return it is bringing, you should consider it.

Really looking forward to what the is shared by Zenith and their aggregation exercise

FNAC Video Wall

Interesting idea. Engaging use of sound and motion. Interesting way to sample music.  Disappointing when it doesn't respond properly.  When you touch the CD in the wall it is supposed to change tracks, and it doesn't do that quickly enough, look what happens. 

- Contributed by Ian Whitney

Inconvenience

We've a project going on in the Denver office on the notion of convenience. So this little blog has been set up by Paul to discuss the opposite - those things that inconvenience and bug the hell out of us.  He's looking for comment and stories about things that get on your nerves and you see as inconvenient in your day-to-day life. We thought we'd enlist our Shopper Culture readership to contribute the things that you all find inconvenient in your day-to-day life as we're sure there is a lot!

So please have a look and leave your own story of things that are not convenient to you somewhere on the blog, or feel free to email Paul to add to his collection of stories. If you also find your way to pass this on to other people you know get riled up by life's little inconveniences, that would be fantastic.

Thanks

RFID in the hands of the consumer.

You know what you’re looking for.  All you need is to make sure that the store has it.  Before spending money on gas to get there, you call up the store to ask if they have your treasured item.  “Yes, we have 11 of them on hand,” they say after checking their system’s inventory records.  “Great! Now all I need to do is run down to the store and pick it up,” you think to yourself.  All things seem to be going smoothly until you arrive at the store only to find out that they actually don’t have your item.  Has this happened to you?  It has happened to me far too many times.

As people’s everyday lives become busier, retailers constantly strive to make the shoppers’ in store experiences as enjoyable as possible.  Welcome to the world of Radio Frequency Identification (RFID).  Most retailers tend to look at RFID as a way to help increase their efficiency in tracking store inventory, monitoring the location of items within the store, and loss prevention.  In doing so, the consumer benefits by the store’s ability to track and locate items with ease, creating a more pleasurable shopping experience.  Retailers all over the world are utilizing RFID,  which not only leads to efficiencies, but also cost savings.  As RFID becomes less expensive to initiate, more and more retailers are jumping on board to utilize this powerful technology.

But what if retailers utilized their ability to monitor the location of items within their store to enhance your shopping experience?  Imagine the freedom consumers would have if a store built their internal RFID tracking system into their website.  Not only could you confirm total on-hands, but you could also confirm the items location in the store before you even walk out your door.  Talk about taking control of your shopping experience!  But this brings up some interesting questions.  Would this increase the number of “mission based shoppers” and if so, how would it change in store shopping dynamics?  Would a retailer want to give consumers this level of visibility? Something to think about…

- Image from Wikipedia.org

 

Point De Ventre - Paris

Paris recently hosted a Retail Marketing event called Point De Ventre. Ian Whitney from our Paris office went along, shot some video and made a quick presentation of some of the innovative technology that delivers meaningful shopper engagement. 

Great sign-off Ian!

The Biggest "Bundling" Deal Ever

 

 

Retailers offering sustainable products and habits continue to grow and gain momentum – and more and more retailers are thinking of innovative ways to engage consumers on becoming Green. 

Sam’s Club, like so many other retailers, is focusing their retail efforts around sustainability and Saving Green. They offer great eco-friendly products and tips both in-store and through their catalogue – but are now taking their sustainability efforts to a whole new level, by offering a “for purchase” Eco Home Makeover. For just $44,000 all of your eco-dreams can come true. The package includes solar panels, a wind turbine, high efficiency appliances for your kitchen and laundry, and energy efficient lighting. All of this aside, you also get put up in a luxury eco-lodge in Maine during installation, and you come home to a house-warming party to celebrate your eco-wonderfullness! Now that's what I call a package deal!

"Bundling" seems to be a relatively new concept, at least in its current context. Companies are bundling/packaging their services left and right. What began with vacations is now being offered by companies like Comcast, the largest cable company in the United States. It seems to make sense. As our lives get more and more complex, the more we want (and need) to simplify.

This offer is quite unique, however. Never before have I seen such a 360 degree approach. Comcast is certainly not sending you for a mani/pedi while they sync up your wireless to cable to tv to music. In fact, your schedule is at a disadvantage by opting for their services. Sam's Club, however, has pretty much covered every possible excuse you could think of to not do this. For example:

    1. "I don't want their unsightly appliances in my kitchen."

    With Sam's Club, you can choose the appliances yourself.

    2. "Where are we going to go while they tear everything apart?"

    Sam's club will not only put you up, but fly you so far away that the sound of wrecking balls is the furthest thing from your mind.

    3. "How am I ever going to clean up the inches of dust they're going to leave in order to show off our new home?"

    They're not only going to clean, they'll throw the whole darn thing for you! And bring PBS camera men!

It will be really interesting to see what kind of traction this gets in the marketplace. This is clearly not a "bundle and save" offer, nor is it a "go green, save green" initiative. This is pure convenience for the eco-minded shopper.

In this lies the potential to change the way we offer services. Is there a limit to what people will pay for this type of worry-free experience? Will brands/companies/services be forced to turn into experiencial machines to stay afloat? Time will tell. But it seems as though the gap between "do it yourself" and "have it done for you" is getting wider and wider.

Read more at http://www.samsclub.com/shopping/navigate.do?catg=11606

Realities of Digital P.O.S.

Everything is going digital! There is a buzz over digital signage in the retail and marketing industry. In fact, during my attendance at the recent Digital Signage Expo, I experienced a vast number of digital tools that will be a large part of our retail landscape in the foreseeable future. I was one of 3,400 attendees – a 70% increase from the show in 2007, which demonstrates the demand for and interest in digital today.  The expo showcased an abundant number of monitors and other gadgets, in many sizes and capabilities, along with supporting content applications to engage customers and consumers in and around retail venues. The technology and equipment being offered is extraordinary. It visually catches your attention and then offers an interactive function that makes the experience memorable.

The retail opportunities around digital are exciting.  As consumers experience digital content every day at home and work, they expect it more and more at places where they shop.  Digital strategies at retail can help educate consumers, build brands, and create a unique in-store experience.  Wal-Mart is broadcasting ads and information segments on their in-store Wal-Mart Network and upgrading their network monitors to wide-screen LED monitors.  Walking through airports, travelers are accustomed to viewing monitors for travel information and now are seeing monitors positioned vertically in front of magazine stores to promote the latest magazine covers.  Monitors are also popping up on gas pumps to help bring consumers inside the store for additional purchases.

Even as digital signage grows at retail, it is not totally mainstream yet.  After seeing all the new opportunities from the digital show, I was thinking, when will we see more of these cool interactive tools during our regular shopping experience? I was surprised the other day though. At a large local liquor store in Westminster, I experienced the Virtual Bartender.  This interactive kiosk features party tips, recipes and food pairings for beer, liquor and wine.  Users interact with a "virtual" bartender and can print out selections and information (sales receipt size) to then go shop and purchase.  The information can also be e-mailed to the consumer.  I was able to learn more about certain beers and get a suggested cabernet to go with beef.  The concept can also be experienced online at www.thebar.com.

Right now, the retail opportunities are truly abundant; however, digital POS and information touch-points will at some point become conventional. As digital becomes mainstream, will consumers continue to engage with the medium or will they lose interest in the multitude of digital POS? How will marketers cut through potential clutter to keep shoppers engaged with their brand?

The future is exciting for retailers and marketers as they determine the right strategy for digital POS and to keep shoppers engaged with their brands.

- contributed by Chris Gerhold